Sikorsky Awarded $1.24 Billion Presidential Copter Deal

May 8 (Bloomberg) -- United Technologies Corp.’s Sikorsky
Aircraft unit received a $1.24 billion Pentagon contract for
helicopters to ferry the president and executive branch
officials.

A team led by Sikorsky was the only bidder on the contract
that was announced yesterday on a Defense Department website.
The contract for engineering and an initial six aircraft will
increase in value as production options for more helicopters are
negotiated.

The Pentagon has spent years trying to develop a
replacement for the executive helicopter, known as Marine One
when it carries the president. An earlier program managed by
Lockheed Martin Corp. was canceled in 2009 by Defense Secretary
Robert Gates after what started as a $6.1 billion project for as
many as 28 copters grew to a projected $13 billion.

About $3.1 billion had been spent by then on a program that
President Barack Obama cited in February 2009 as “an example of
the procurement process gone amok.”

This time, Sikorsky will lead a team of Bethesda, Maryland-based Lockheed, Rockwell Collins Inc., Honeywell International
Inc., United Technologies Aerospace Systems and L-3
Communications Holdings Inc.

General Electric Co., based in Fairfield, Connecticut, will
supply engines for the aircraft, a modified version of
Sikorsky’s S-92 helicopter.

The Naval Air Systems Command will manage the program.
Sikorsky, which also built the aging helicopters now in use, was
awarded a fixed-price-incentive type contract, which sets a
ceiling while rewarding a contractor for keeping costs less than
targets.

Sikorsky’s Comment

“For 57 years, our company has been trusted with the
critical responsibility of building and supporting a safe and
reliable helicopter fleet for the president of the United
States,” Sikorsky President Mick Maurer said in a statement.

Sikorsky’s parent company, United Technologies, is based in
Hartford, Connecticut.

The first six copters are expected to be delivered in 2019
and fielded the next year, according to Navy documents submitted
for the fiscal 2015 budget.

The new aircraft are intended to replace 11 Marine Corps
VH-3D helicopters that first entered service in 1974 and eight
VH-60s initially used in the 1980s.

Helicopters have transported American presidents since
1957, when “President Dwight D. Eisenhower -- away on vacation
-- was urgently needed back at the White House,” according to a
Marine Corps website. “ What would have been a two-hour
motorcade trip was reduced to a seven-minute helicopter ride.”

Falling Behind

At the time of the 2009 cancellation, the first version of
the new aircraft was supposed to be operational by September
2010 and was running at least 18 months late. A second, more
capable version -- originally due by December 2017 -- was at
least 24 months late.

The program’s demise was blamed on a combination of
unrealistic and changing requirements, optimistic scheduling and
inadequate contractor performance.

Sikorsky emerged as the sole bidder in the latest round
after other companies considered and then dropped plans to
compete.

Boeing Co. and Northrop Grumman Corp. had separately
considered bidding, each in partnership with AgustaWestland, a
unit of Finmeccanica SpA. Both companies had planned to offer
AgustaWestland’s AW101 helicopter -- the same model Lockheed had
proposed to build before its version was canceled.

The U.S. Government Accountability Office last month said
the Navy was starting the latest version with a more realistic
understanding of requirements and readiness of the technology
“that generally aligned with acquisition ‘best practices.’”

Defense officials sought “to make sure we did as careful a
job on this acquisition as we could” after the 2009
cancellation, Frank Kendall, the Pentagon’s chief weapons buyer,
told the Senate Armed Services Committee on April 30.

The requirements for the new copter “are firm in this
case,” Kendall said, unlike the shifting criteria under the
previous effort.